Proposed Wind Energy Contracts May Hike Residential Rates

New York State's own regulations might be its own worst enemy to building renewables. Learn why NY Wind Energy may cost rate payers more.

Will Wind Energy Projects Raise Electric Rates?

Wind energy could cut NY electric prices eventually. But getting there may cost the state's rate payers more. Learn why contractors want more money.
Learn the factors pushing wind energy contractors to demand more money. Renewables may cost NY rate payers less eventually but getting there will likely cost you more.

Making the switch to 70% renewable energy by 2030 isn’t like flipping on the kitchen light. Renewable energy projects, such as offshore wind farms, can take years in the planning and permitting process. And these projects are costly. Of course, some of these costs get passed on directly to consumers. For example, you pay higher electric rates so utilities like National Grid can update their part of the grid. So, while wind energy contracts are a good thing, how much will they cost you in higher rates?

Wind Energy Contractors Ask for More Money

The state needs to add the 20 gigawatts of renewable energy to meet NY green energy requirements. To do this, the state has several big projects in the pipeline. But, there have been bumps in the road. A major contractor, Ørsted, said in August it would need more money for projects. In their statement, they sited inflation, delays in supply chain, higher interest rates, and losing tax incentives as main reasons for needing more cash.

The ask puts NY in a tough spot. The added expenses number in the billions. It would not be easy for NY to pay the bill. However, it’s unlikely prices on future projects would be any lower. In the meantime, relying on fossil fuels is likely to increase costs for customers anyway.

NYS Comptroller Report Spots Roadblocks to Renewables

The NYS comptroller issued a report identifying three major factors in new renewable projects: incentives, permitting, and interconnection. The second and third of these play the greatest role in big projects like those with Ørsted.

According to the report, the permit process for NYS is long. By the time a project makes it through, changes in the economy can add huge costs. The 2020-21 state budget brought in changes to shorten the process.

The report also names interconnection as a sticking point. The process includes several studies and takes over three years. That’s because interconnection involved connecting a generator to the grid. And again, it’s not as easy as flicking the kitchen light. But the wait time is the longest in the country. We may not know the cost breakdown of a renewable energy project. But we all know a major construction contract will have a different price after a 3-year wait.

New Wind Energy and Electric Rates

Developers are looking for a way to pay for the mounting costs of new wind energy projects. They have even asked the PSC to increase NY electric rates. From a Utility Dive article, the increase is about 4%, or $4.67 per month. New York utilities are against the rate increase. The same Utility Dive article states these utilities, like Central Hudson, worry that approval of the rate hike would lead developers to underestimate risks in the future to submit lower bids. Other groups hope for a more reasonable compromise where some costs are considered, but not all.

Because in-state renewable energy generation is a priority, it’s likely residential customers will pay for some of these increased costs. But, like you, we’re concerned about how much that will be. For updates on this story and more information about NY electricity, visit us at  

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